FROM SARDAR SHAHAB
LONDON: The UK has agreed to double imports of US gas over the next year as it tries to stabilise soaring energy prices.
Prime Minister Rishi Sunak said the plan would “bring down prices for British consumers and help end Europe’s dependence on Russian energy”.
Russia has cut off the majority of its gas supplies to Europe over the past year after its invasion of Ukraine. The UK does not import gas from Russia directly, but has been hit by rising wholesale prices on the Continent.
Under the agreement, the UK aims to double imports of liquefied natural gas (LNG) from the US to 9-10 billion cubic metres over the next year.
That is equivalent to about an eighth of the gas the UK uses every year. The two countries will also boost collaboration over the development of new nuclear and green energy technologies.
The partnership will be steered by a new UK-US joint action group, led by senior officials from the British government and the White House, with the first meeting held virtually on Thursday.
Citing the war in Ukraine, Mr Sunak and Mr Biden said in a joint statement that it is “more important than ever” for allies to work together to build “resilient international systems”.
“Our immediate shared goal to stabilise energy markets, reduce demand, and ensure short-term security of supply is underpinned by the longer-term objective of supporting a stable energy transition to achieving net zero emissions by 2050, which in itself will strengthen our energy security,” they said.
Nathan Piper, an oil and gas analyst at Investec, said the deal would help to secure gas supplies across Europe, where Russian gas imports are down by more than 80% compared to last year.
The UK has limited gas storage capacity, so any excess gas is likely to be exported through interconnecting pipes to Holland and Belgium, he said.
However, he said the plan is unlikely to bring down wholesale prices significantly this winter as demand soars. He also said the deal was more or a statement of intent, adding “it’s an ambition and not certain”.
Overall, US exports of LNG have been restricted since a fire damaged the country’s second largest LNG facility in June. The Freeport LNG facility in Texas is not expected to be fully operational again until March next year.
There are concerns that Europe’s increasing reliance on LNG could hamper efforts to tackle global warming.
Recent research showed that the production and transport of LNG causes up to ten times the carbon emissions compared to pipeline gas. In addition, most of the increases in US gas production since 2005 have come from fracking, which has proven controversial in the UK.
